<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ x ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
VECTRA BANKING CORPORATION
------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Reid A. Godbolt
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
1) Title of each class of securities to which
transaction applies:
___________________________________________________
2) Aggregate number of securities to which transaction
applies:
___________________________________________________
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11.(1)
___________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------
2) Form, schedule or Registration Statement No.:
-----------------------------------------------------
3) Filing Party:
-----------------------------------------------------
4) Date Filed:
-----------------------------------------------------
<PAGE> 2
VECTRA BANKING CORPORATION
1650 SOUTH COLORADO BOULEVARD, SUITE 320
DENVER, COLORADO 80222
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1997
To the Shareholders of Vectra Banking Corporation:
The annual meeting of shareholders of Vectra Banking Corporation (the
"Company") will be held at the Phipps' Mansion, 3400 Belcaro Drive, Denver,
Colorado, on Wednesday, April 23, 1997, at 9:00 a.m. local time, for the
following purposes:
1. The election of eight Directors;
2. Approval of the appointment of KPMG Peat Marwick LLP as
independent auditors for 1997;
3. To consider and vote upon a proposal to amend the Articles of
Incorporation to increase the Company's authorized shares from
8,000,000 (1,000,000 shares of Preferred Stock and 7,000,000
shares of Common Stock) to 30,000,000 shares (5,000,000 shares
of Preferred Stock and 25,000,000 shares of Common Stock); and
4. Transaction of such other business as may properly come before
the annual meeting.
The Board of Directors has fixed the close of business on March 14,
1997, as the record date for the determination of shareholders entitled to vote
at the annual meeting. Only shareholders of record at the close of business on
March 14, 1997, will be entitled to vote at the annual meeting.
All shareholders are cordially invited to attend the annual meeting in
person. TO ENSURE THAT YOU ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE FILL
IN, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU
ATTEND THE ANNUAL MEETING YOU CAN REVOKE YOUR PROXY AND VOTE IN PERSON. Your
early attention to the proxy will be greatly appreciated because it will reduce
the costs incurred in obtaining voting instructions from shareholders.
By Order of the Board of Directors
/s/ RAY L. NASH
Ray L. Nash, Secretary
March 21, 1997
<PAGE> 3
VECTRA BANKING CORPORATION
1650 SOUTH COLORADO BOULEVARD, SUITE 1650
DENVER, COLORADO 80222
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Vectra Banking Corporation ("Vectra" or
the "Company") for use at the annual meeting of shareholders of Vectra to be
held at the Phipps' Mansion, 3400 Belcaro Drive, Denver, Colorado, on
Wednesday, April 23, 1997, at 9:00 a.m. local time, and any postponement or
adjournment thereof.
This Proxy Statement and the enclosed proxy card were sent to Vectra's
shareholders on or about March 21, 1997.
MATTERS TO BE CONSIDERED.
The following matters will be acted on at the annual meeting:
1. Election of eight Directors to serve for the ensuing
year and until their successors are
elected and qualified;
2. Approval of the appointment of KPMG Peat Marwick LLP
as independent auditors for 1997;
3. To consider and vote upon a proposal to amend the
Articles of Incorporation to increase the
Company's authorized shares from 8,000,000 (1,000,000
shares of Preferred Stock and 7,000,000
shares of Common Stock) to 30,000,000 shares
(5,000,000 shares of Preferred Stock and
25,000,000 shares of Common Stock); and
4. Transaction of such other business as may properly
come before the annual meeting.
VOTING SECURITIES AND VOTING RIGHTS.
Only shareholders of record of Vectra Common Stock on March 14, 1997,
or their proxies, will be entitled to vote at the annual meeting. On March 14,
1997, Vectra had 3,202,412 shares of Common Stock outstanding.
A majority of the shares of Common Stock outstanding must be
represented at the annual meeting in person or by proxy to constitute a quorum
for the transaction of business. Each share of Common Stock is entitled to one
vote on all matters. In the election of directors, each share of Common Stock
is entitled to one vote for a nominee for each director position. Vectra does
not have cumulative voting. A shareholders' list will be available for
examination by shareholders at the annual meeting.
VOTING PROCEDURE.
The shares represented by each properly executed proxy returned to
Vectra will be voted at the meeting as indicated on the proxy. If no
instructions are given, the persons authorized by the proxy will vote in favor
of election of the nominees as Directors named in this Proxy Statement, for the
approval of the appointment of KPMG Peat Marwick LLP as independent auditors of
Vectra for 1997, and for an amendment to the Articles of Incorporation to
increase the Company's authorized shares from 8,000,000 (1,000,000 shares of
Preferred Stock and 7,000,000 shares of Common Stock) to 30,000,000 shares
(5,000,000 shares of Preferred Stock and 25,000,000 shares of Common Stock).
Any person giving a proxy has the right to revoke it at any time before it is
exercised by filing with the Secretary of Vectra a duly signed revocation or
proxy bearing a later date or by voting in person at the meeting.
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The Board of Directors is not aware of any matters other than those
set forth above which may come before the annual meeting. If any other matters
are properly presented to the meeting for action, unless contrary instructions
are given, the persons named in the enclosed form of proxy and acting
thereunder have the power to vote in accordance with his best judgment on such
matters.
Election of the nominees as Directors and approval of the appointment
of independent auditors will require the affirmative vote of a majority of the
shares of Common Stock represented at the meeting.
If a proxy is marked with instructions to withhold authority to vote
for one or more director nominees or to abstain from voting on any matter,
those shares will be treated as represented at the meeting and entitled to vote
in determining whether a quorum is present. In other matters where approval is
required by a majority of shares outstanding or represented at the meeting,
abstentions from voting on a matter will have the effect of a vote against the
matter.
SOLICITATION OF PROXIES.
The cost of solicitation of proxies will be borne by Vectra.
Solicitation of proxies may be made by officers, directors and employees of
Vectra in person, by telephone or by mail. In addition, brokers, banks and
other nominee holders will be reimbursed for expenses they incur in forwarding
proxy materials to and obtaining voting instructions from beneficial owners of
Common Stock.
HOLDINGS OF NOMINEES, CERTAIN OFFICERS AND PRINCIPAL HOLDERS OF COMMON STOCK.
On March 14, 1997, there were approximately 200 record holders of
Vectra Common Stock; management estimates that there are another 1,200
beneficial owners of the Common Stock.
The following table sets forth certain information regarding
beneficial ownership of Common Stock, as of March 14, 1997, by (i) each
shareholder known by Vectra to be the beneficial owner of more than 5% of the
outstanding Common Stock and (ii) each nominee of Vectra and its executive
officers and (iii) all nominees and executive officers as a group. Unless
otherwise indicated, based on information furnished by such owners, management
believes that the shareholders listed below have sole investment and voting
power with respect to their shares.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF SHARES
BENEFICIAL OWNER OWNED OWNED
- ---------------- --------- ----------
<S> <C> <C>
Directors and Executive Officers
W. James Tozer, Jr. . . . . . . . . . . . 259,500(2) 8.1 %
1112 Park Avenue
New York, New York 10128
Gary S. Judd . . . . . . . . . . . . . . 133,213(3) 4.1 %
1650 S. Colorado Blvd., Suite 320
Denver, Colorado 80222
Richard B. Tucker . . . . . . . . . . . 52,660(2) 1.6 %
1 Cherrymoor Drive
Englewood, Colorado 80110
James L. Rumsey . . . . . . . . 5,200(2) (1)
4505 South Yosemite, #356
Denver, Colorado 80237
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C> <C>
Robert D. Greene . . . . . . . . . . . . 36,400 (2) 1.1 %
6529 S. Adams Court
Littleton, Colorado 80121
Robert C . Barton . . . . . . . . . . . 30,821 (4) (1)
1650 S. Colorado Blvd., Suite 320
Denver, Colorado 80222
Ray L. Nash . . . . . . . . . . . . . . 29,970 (5) (1)
1650 S. Colorado Blvd., Suite 320
Denver, Colorado 80222
Michael Y. Meganck . . . . . . . . . . . 14,193 (6) (1)
1650 S. Colorado Blvd., Suite 320
Denver, Colorado 80222
Joseph J. Wolf . . . . . . . . . . . . . 8,966 (7) (1)
1650 S. Colorado Blvd., Suite 320
Denver, Colorado 80222
J. Patrick McDuff . . . . . . . . . . . . 9,236 (8) (1)
1375 Walnut Street
Boulder, Colorado 80302
Robert A. Silverberg . . . . . . . . . . 88,951 2.8 %
300 South Federal Boulevard
Denver, Colorado 80219
Mary Gittings Cronin . . . . . . . . . . 1,500 (9) (1)
370 17th Street
Denver, Colorado 80202
Gary A. Mosko . . . . . . . . . . . . . . 234,558 (10) 6.8 %
1380 South Federal Boulevard
Denver, Colorado 80219
All executive officers and
nominees as a group (13 persons) . . . 905,168 25.6%
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF SHARES
BENEFICIAL OWNER OWNED OWNED
- ---------------- ----------- ------------
<S> <C> <C>
Other principal shareholders
Lawrence, Tyrell, Ortale & Smith 251,800 7.9 %
515 Madison Avenue
New York, New York 10022
B. John Barry . . . . . . . . . . . . . . 207,000 6.5 %
1128 Red Mountain Road
Aspen, Colorado 81612
- ------------
</TABLE>
(1) Less than 1%.
(2) Includes 4,500 shares which are presently exercisable pursuant to
options granted under Vectra's Non-Employee
Directors' Stock Option Plan.
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<PAGE> 6
(3) Includes 45,000 shares which are exercisable pursuant to options
granted under Vectra's Employees' Equity Incentive Plan.
(4) Includes 11,166 shares which are presently exercisable pursuant to
options granted under Vectra's Employees' Equity Incentive Plan and
Non-Statutory Stock Option Plan.
(5) Includes 12,500 shares which are presently exercisable pursuant to
options granted under Vectra's Employees' Equity Incentive Plan
and Non-Statutory Stock Option Plan.
(6) Includes 6,033 shares which are presently exercisable pursuant to
options granted under Vectra's Employees' Equity Incentive Plan
and Non-Statutory Stock Option Plan.
(7) Includes 5,766 shares which are presently exercisable pursuant to
options granted under Vectra's Employees' Equity Incentive Plan
and Non-Statutory Stock Option Plan.
(8) Includes 5,766 shares which are presently exercisable pursuant to
options granted under Vectra's Employees' Equity Incentive Plan
and Non-Statutory Stock Option Plan.
(9) Includes 1,500 shares which are presently exercisable pursuant to
options granted under Vectra's Non-Employee Directors' Stock Option.
(10) Represents the number of shares of Common Stock that may be issued to
Mr. Mosko pursuant to his ownership of 29,090 shares of $100 Series A
Convertible Preferred Stock. Of this amount, Mr. Mosko owns 21,305
shares directly (or the equivalent of 160,792 shares of Common Stock)
and 9,774 shares indirectly (or the equivalent of 73,766 shares of
Common Stock), of which 927 shares are owned as custodian for children
and 8,847 shares are owned as a trustee.
Vectra knows of no arrangements which may result in a change of
control of Vectra.
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<PAGE> 7
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of Vectra consists of eight members. Eight
Directors are to be elected at the annual meeting. The person authorized by
the enclosed form of proxy will vote each proxy received by him for the
election of the nominees named below unless contrary instructions are given.
The term of office for all Directors will commence on election and such persons
will serve as Directors until their successors are elected and qualified. Each
nominee has consented to be named in this Proxy Statement and to serve if
elected. It is not expected that any nominee will become unable to serve as a
Director prior to or after the annual meeting.
THE BOARD OF DIRECTORS OF VECTRA RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES NAMED BELOW. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED FOR THE NAMED NOMINEES UNLESS INSTRUCTIONS ARE GIVEN TO THE CONTRARY.
The following sets forth certain information with respect to each of
the nominees:
NAME AGE POSITION
- ---- --- --------
Gary S. Judd 56 President, Chief Executive Officer
and Director of Vectra; President of Vectra
Bank
W. James Tozer, Jr. 55 Director
Richard B. Tucker 67 Director
Robert D. Greene 56 Director
James L. Rumsey 64 Director
Robert A. Silverberg 61 Executive Vice President and Director
Mary Gittings Cronin 58 Director
Gary A. Mosko 51 Executive Vice President and Director
There are no family relationships among any of the directors and
executive officers of Vectra.
GARY S. JUDD has been President, Chief Executive Officer and a
Director of Vectra since he and Mr. Tozer founded it in March 1988. Mr. Judd
has been President of Vectra Bank since July 1992. Mr. Judd's previous
experience includes over 16 years of employment with Citicorp and Citibank,
N.A. in a broad range of senior managerial positions both internationally and
in the United States.
W. JAMES TOZER, JR. was a Director from March 1988 through August
1989, and has been a Director since April 1991. For the last five years, Mr.
Tozer has been managing director of Vectra Management Group, an organization
unrelated to Vectra which is involved in real estate development and management
of private investments. From April 1993 to December 1994, Mr. Tozer was
President, Chief Executive Officer and a Director of Lincolnshire Management,
Inc., a New York based investment firm. From July 1990 through March 1993 he
served as an advisor to financial institutions and managed private investments.
Mr. Tozer's previous financial service industry experience includes 20 years of
senior management positions at Marine Midland Bank, Prudential Securities, Inc.
and Citicorp/Citibank. Mr. Tozer serves as trustee of the Citizens Budget
Commission. Mr. Tozer was also a director of Cobra Industries, Inc. from 1993
through October 1995. Cobra Industries filed for reorganization under federal
bankruptcy laws in October 1995 and is being liquidated.
RICHARD B. TUCKER has been a Director since August 1989. Mr. Tucker
has been Chairman of Custom Envelope Corporation, Denver, Colorado since 1980.
From 1950 through 1977, Mr. Tucker was employed by PakWell
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<PAGE> 8
Corp., ending his tenure as President. Mr. Tucker is a board member of several
civic organizations, including Allied Jewish Federation, National Jewish
Hospital, Rose Medical Center and the Rose Foundation.
ROBERT D. GREENE has been a Director since October 1989. Mr. Greene
is a business consultant. Mr. Greene retired from Safeway Foods in June 1993,
ending his 37-year tenure with that company as Senior Vice President and
Division Manager.
JAMES L. RUMSEY has been a Director since October 1989. Mr. Rumsey
has been an independent financial and management consultant since May 1990.
From November 1985 through April 1990 Mr. Rumsey was President and Chief
Executive Officer of Scott Capital Corporation, Denver, Colorado, a private
holding company. Prior thereto, Mr. Rumsey held senior management positions
with Spectrum Oil and Gas Company, Outdoor Sports Industries, Inc., Rio Grande
Industries, Inc. and Albritton Engineering Corporation. Mr. Rumsey is a
director and President of the Colorado Episcopal Foundation.
ROBERT A. SILVERBERG has been Executive Vice President and Director of
Vectra since November 1995. From 1981 until joining Vectra he was Chairman of
the Board of First Denver Corporation and First National Bank of Denver. He is
also a director of Vanguard Cellular Systems, Inc., a corporation with a class
of equity securities registered under the Securities Exchange Act of 1934.
MARY GITTINGS CRONIN has been a Director since November 1995. She has
been the Executive Director of The Piton Foundation, Denver, Colorado since
1977.
GARY A. MOSKO has been Executive Vice President and a Director since
June 1996. From 1974 until joining Vectra he was a director and an executive
officer of Southwest State Bank, most recently, since 1983 as president and
chairman of the board of directors. He served as president and chairman of the
board of directors of Bank Land Co., the majority shareholder of Southwest
State Bank, from 1991 until he joined Vectra. An employment agreement between
Mr. Mosko and Vectra provided that Mr. Mosko would be appointed as a Director
of Vectra in 1996 and that he would be nominated to serve as a Director of
Vectra at the annual meeting.
Each Director who is not an employee of Vectra or any of its
subsidiaries is paid a Director's fee of $5,000 per year and fees of $125 for
each board or committee meeting attended. In addition, the chairman of the
Audit Committee is paid $1,000 per year. Directors are reimbursed for expenses
incurred in attending board and committee meetings.
The Board of Directors held 12 meetings during 1996. Each Director's
attendance at the Board meetings and meetings of the Committees on which he or
she served was at least 75%.
Vectra's Board of Directors has two committees: an Audit Committee and
a Compensation Committee. The Audit Committee is responsible for making
recommendations to the Board of Directors concerning the engagement of
independent public accountants, reviewing the overall scope and results of the
annual audit of Vectra and performing such other functions as may be prescribed
by the Board of Directors. The members of the Audit Committee are elected
annually by the Directors. The Audit Committee met twice in 1996.
The Compensation Committee is authorized to review the compensation of
the officers of Vectra and its subsidiaries and to make recommendations to the
Board of Directors concerning officers' salaries, stock options and any other
forms of compensation, to review recommendations to the Board of Directors
concerning the compensation of the Directors and to perform such other
functions as the Board of Directors may direct. The members of the
Compensation Committee are elected annually by the Directors. The Compensation
Committee met twice in 1996.
The members of each committee are as follows:
Audit Compensation
----- ------------
James L. Rumsey (Chairman) Richard B. Tucker (Chairman)
W. James Tozer, Jr. Robert D. Greene
Gary S. Judd (ex officio member)
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<PAGE> 9
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during the year ended December 31, 1996, Vectra is not
aware of any officers or directors who failed to file reports required by
Section 16 of the Securities Exchange Act of 1934 on a timely basis.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by Vectra to
its chief executive officer and each of its executive officers who received
compensation in excess of $100,000 during any of the years ended December 31,
1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
---------------------------
Fiscal Annual Compensation Restricted
Name and Principal ------------------- Stock All Other
Position Year Salary Bonus Awards(2) Options Compensation(1)
- -------------------------- ----- -------- ------ --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gary S. Judd . . . . . . . . . . . . 1996 $201,400 $45,000(3) --- --- $3,000
President and Chief Executive Officer 1995 $151,440 --- --- --- $3,029
1994 $151,440 --- --- 45,000 $3,029
Robert C. Barton . . . . . . . . . . 1996 $113,708 $22,700(3) $ 95,063 --- $1,990
President-Vectra Mortgage Group 1995 $110,001 --- 2,500 $1,101
1994 $105,298 $10,000(2) --- 5,000 $1,053
Ray L. Nash . . . . . . . . . . . . . 1996 $ 98,108 $51,900(4) $ 103,594 --- $1,962
Chief Financial Officer 1994 $ 91,560 $18,000 10,000 $1,891
J. Patrick McDuff . . . . . . . . . . 1996 $ 97,418 $13,695(3) $ 46,313 --- $1,948
Regional President 1994 $ 91,440 $20,000 5,000 $1,829
Michael Y. Meganck . . . . . . . . . 1996 $ 85,958 $25,740(3) $ 52,406 --- $1,719
Senior Credit Policy Officer
</TABLE>
- ---------
(1) Represents Vectra's matching contribution to its Section 401(k)
Retirement Savings Plan.
(2) Represents the fair market value of shares of Vectra Common Stock as
of May 1996, when the individuals' interests in the shares issued under
Vectra's 1992 Restricted Stock Plan vested.
(3) While this bonus was earned in 1996, no amount was paid in 1996 and
50% was paid in 1997. It is scheduled for remaining payment in
increments of 25% in each of 1998 and 1999. The 1998 and 1999 payments
will be forfeited if the officer is no longer employed by Vectra as of
January of the year in which the payment is scheduled to be made.
(4) Of this bonus, $22,500 was paid in 1996. The remaining balance is
scheduled for payment in increments of 50%, 25% and 25% in 1997, 1998
and 1999, respectively. The 1998 and 1999 payments will be forfeited
if the officer is no longer employed by Vectra as of January of the
year in which the payment is scheduled to be made.
In 1995, the Board of Directors adopted a plan whereunder a limited
number of key employees of Vectra, including Messrs. Barton, Nash, Meganck and
McDuff but excluding Mr. Judd, would receive payments equal to one year's base
salary upon a change in control of Vectra if they were not offered comparable
employment with the successor.
Vectra has an employment agreement with Gary A. Mosko through June
1999 providing for an annual salary of not less than $125,000. Under the
agreement Mr. Mosko serves as Executive Vice President of Vectra and he was
also elected to the Board of Directors of Vectra in June 1996. Mr. Mosko has
also entered into a Covenant Not to
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<PAGE> 10
Compete with Vectra through June 2000, in consideration for which he receives a
total payment of $540,000 payable in equal quarterly installments of $33,750.
The Covenant Not to Compete covers a 50-mile radius of Vectra and provides
that, in the event there is a change in control of Vectra during the term of
the Covenant Not to Compete, Mr. Mosko may terminate the covenant on the date
of such change, in which event, Vectra must pay to Mr. Mosko the unpaid balance
of the $540,000.
Vectra has an agreement with Robert A. Silverberg through November
1998 under which he serves as an officer for Vectra, and agrees to stand for
election as a director of Vectra and its subsidiary banks if requested by
Vectra and agreeable to him. Under the agreement, Mr. Silverberg receives
$80,000 per year in return for representation of Vectra in the Denver
Metropolitan area and assisting in its business development activities.
INCENTIVE PLANS
Vectra has adopted various incentive plans for its employees and
directors. The Board of Directors has adopted a policy that the total number
of shares of Common Stock subject to grants and awards will not exceed 10% of
the outstanding number of shares of Common Stock at the date of grant or award.
This policy may be changed in the discretion of the Board. Further, this
limitation does not apply to the 1992 Restricted Stock Program, which has a
limit of 30,000 shares, and all of which are issued and outstanding and not
subject to any restrictions under such plan. At December 31, 1996, options
were outstanding under the incentive plans for a total of 184,000 shares of
Common Stock.
EMPLOYEES' EQUITY INCENTIVE PLAN. Vectra has adopted an Employees'
Equity Incentive Plan (the "Employees' Plan") to provide long-term incentives
to its key employees, including officers and Directors who are employees of
Vectra. The Employees' Plan provides for an authorization of up to 450,000
shares of Vectra Common Stock for issuance thereunder subject to the Board
limitation that in combination with shares subject to grant under this and
other option plans, the total awards may not exceed 10% of the outstanding
number of shares of Common Stock at the date of grant or award. Under the
Employees' Plan, Vectra may grant employees stock options, performance awards
or restricted stock, or any combination thereof.
OUTSIDE DIRECTORS' STOCK OPTION PLAN. Under the Nonemployee
Directors' Stock Option Plan (the "Outside Directors' Plan"), an aggregate of
75,000 shares of Common Stock are reserved for issuance to directors who are
not employees of Vectra. Outside Directors are automatically granted options
to purchase 1,500 shares at each anniversary date of service as a Director.
Each option granted under the Outside Directors' Plan is immediately
exercisable for one-third of the shares and becomes exercisable for an
additional one-third of the shares on each of the first two anniversaries of
the date of grant. The options expire five years from the date of grant. The
options become immediately exercisable in the event of a change in control of
Vectra or a merger or consolidation in which it is not the survivor.
1989 STOCK OPTION PLAN. In June 1989, the Board of Directors adopted
a stock option plan (the "1989 Plan"). In 1990 and 1992, options were granted
to purchase 69,250 shares of Vectra Common Stock, 46,000 of which remained
outstanding at December 31, 1996. These options were originally scheduled to
vest on June 30, 1994, but were repriced from $10.00 per share to $6.60 per
share in May 1993 with the condition that they vest 20% on June 30, 1994, and
an additional 20% on each June 30 thereafter until the options are fully vested
on June 30, 1998. The options will vest fully in the event of a change of
control of Vectra. In addition, in 1993, options were granted under the 1989
Plan to purchase 3,030 shares of Vectra Common Stock at an exercise price of
$6.60 per share. These 3,030 options were exercised in 1994. Although the
1989 Plan has been terminated, existing options thereunder continue in effect
until they expire or are earlier exercised.
There were no options granted by Vectra during 1996 to any of its
executive officers.
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<PAGE> 11
The following table sets forth the aggregate options held by certain
executive officers of Vectra along with values of in-the-money options at
December 31, 1996.
AGGREGATE OPTION EXERCISES IN 1996
AND 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)(1)
-------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gary S. Judd . . . 45,000 -- 416,250 --
Gary S. Judd . . . 19,167 5,833 186,750 61,063
Robert C. Barton . . . 17,167 7,833 173,950 83,363
Michael Y. Meganck . . 9,467 1,433 86,195 18,693
J. Patrick McDuff . . . 8,467 2,033 76,945 18,693
- ---------
</TABLE>
(1) Based upon the market price per share of Common Stock at December 31,
1996 of $17.75 per share.
RESTRICTED STOCK PROGRAM. In 1992, Vectra adopted a Restricted Stock
Program (the "Program") to provide long-term incentives to its key employees,
including officers who are employees of Vectra. Under the Program, Vectra
issued 30,000 shares of Vectra Common Stock to key employees, other than Gary
S. Judd, President and Chief Executive Officer, at a price of $.01 per share.
All of these shares became fully vested in May 1996.
CERTAIN TRANSACTIONS
Many of the officers, directors and principal shareholders of Vectra
and members of their immediate families and businesses in which they hold
controlling interests are customers of Vectra Bank. Credit transactions with
these parties are subject to review by Vectra's and Vectra Bank's board of
directors. All outstanding loans and extensions of credit by Vectra Bank to
these parties were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and in the opinion of
management did not involve more than the normal risk of collectibility or
present other unfavorable features. At December 31, 1996, the aggregate
balance of loans and advances under existing lines of credit to these parties
was approximately $1,120,000 or 0.35% of Vectra Bank's total loans.
At December 31, 1996 Vectra Bank had two loans outstanding to a
company of which Mr. Tucker is Chairman of the Board and a principal
shareholder. The amounts of loan principal were (i) $183,000 (for equipment
financing), and (ii) $787,000 (secured by a first deed of trust on property
occupied by the borrower). These loans were made under similar terms as would
be made to other borrowers with like credit histories and financial resources.
PROPOSAL NO. 2
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has engaged the firm of KPMG Peat Marwick LLP
as independent auditors to audit and report to the shareholders on the
financial statements of Vectra for the past several years. Representatives of
KPMG Peat Marwick LLP are expected to be present at the annual meeting and will
have the opportunity make a statement if they desire to do so and will be
available to respond to appropriate questions. Although shareholder approval
of the engagement is not required by law, the Board of Directors desires to
solicit such approval. If the appointment of KPMG Peat Marwick LLP is not
approved by a majority of the shares represented at the meeting, the Board of
Directors will consider the appointment of other independent auditors for 1997.
KPMG Peat Marwick LLP has acted as the independent auditors of the
Company for the past several years. KPMG Peat Marwick LLP's report on the
financial statements of the Company for 1994, 1995 and 1996 did not contain an
adverse opinion or a disclaimer of opinion and the reports were not qualified
or modified as to uncertainty, audit scope, or accounting principles. During
1994, 1995 and 1996, there were no disagreements with KPMG Peat Marwick
9
<PAGE> 12
LLP on any matter of accounting principle or practice, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of KPMG Peat Marwick LLP, would have caused KPMG Peat Marwick LLP
to make a reference to the subject matter of the disagreement in connection
with its reports.
THE BOARD OF DIRECTORS OF VECTRA RECOMMENDS A VOTE FOR THE APPROVAL OF
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE YEAR 1997.
PROPOSAL NO. 3
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
To provide for future capital needs of the Company, the Board of
Directors has unanimously adopted a resolution, subject to shareholder
approval, to amend Article 4 of the Company's Articles of Incorporation to
provide additional authorized shares of stock (a copy of Article 4, as it is
proposed to be amended, is attached to this proxy statement as Exhibit A). The
proposal provides for an increase in the authorized stock as follows:
Shares Proposed
Currently to be
Title Authorized Authorized
- ----- ---------- ----------
Common Stock 7,000,000 25,000,000
Preferred Stock 1,000,000 5,000,000
There is no pending or planned transaction which would require the
issuance of any of the newly authorized stock. To date no plans have been made
for the issuance of the additional authorized stock. The additional stock, if
authorized, will be used from time to time on terms and conditions as then
determined by the Board of Directors of the Company in accordance with
applicable Colorado law. While the Board of Directors has no specific plans
to issue proposed additional authorized stock other than as discussed above, it
believes the Company should have the ability to do so if and when the Board
determines that such issuance would be in the best interests of its
shareholders. The Board believes that by enabling the Company to issue
additional stock, the Company will be in a better position to take advantage of
future expansion or capital funding opportunities.
No holder of shares of Preferred Stock or Common Stock shall be
entitled, as such, to any preemptive right or preferential right to subscribe
to any unissued stock or any other securities which the Company may now or
hereafter be authorized to issue.
The proposal is not part of a plan by the Company's management to
adopt a series of anti-takeover amendments over a period of time, nor does
management presently intend to propose other anti-takeover measures in future
proxy solicitations. The proposal is not the result of management's knowledge
of any specific effort to cumulate securities of the Company or to obtain
control of the Company by means of a merger, tender offer, solicitation and
opposition to management or otherwise. The measure is being proposed for the
reasons set forth above.
At present, the Company's Articles of Incorporation and Bylaws do not
contain other provisions having anti-takeover effects. As indicated, there is
no transaction pending or planned for the issuance of stock proposed to be
authorized. It is contemplated that such stock, when issued, may be used to
acquire additional capital, to acquire additional banking organizations and
to fund the future growth of the Company.
If approved by at least a majority of the presently issued and
outstanding shares of Common Stock, the proposed amendment will become
effective upon filing of an Amendment to the Company's Articles of
Incorporation with the Colorado Secretary of State.
THE BOARD OF DIRECTORS OF VECTRA RECOMMENDS A VOTE FOR THE APPROVAL OF
THIS PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION OF VECTRA TO INCREASE ITS
AUTHORIZED CAPITAL STOCK.
10
<PAGE> 13
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Proxy Statement for the 1998
annual meeting of shareholders, proposals of the shareholders must be received
by Vectra no later than November 30, 1997. Such proposals should be directed
to the Secretary of Vectra.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative shareholder return on the
Common Stock since March 24, 1994, when the Common Stock began public trading,
with the cumulative total return on the Nasdaq Composite Index and the Nasdaq
Bank Stock Index. The table below compares the cumulative total return of the
Common Stock as of December 31, 1994, 1995 and 1996, assuming a $100 investment
on March 24, 1994 and assuming reinvestment of all dividends. This data was
furnished by the Center for Research in Security Prices.
<TABLE>
<S> <C> <C> <C> <C>
3/24/94 12/31/94 12/31/95 12/31/96
------- -------- -------- --------
Vectra . . . . . . . . . . . . $ 100 $ 123.53 $ 126.47 $ 208.82
Nasdaq Composite Index . . . . $ 100 $ 96.40 $ 136.30
Nasdaq Bank Stock Index . . . . $ 100 $ 99.10 $ 147.00
</TABLE>
The Vectra Common Stock closing price was $10.50, $10.75 and $17.75 per
share on December 31, 1994, 1995 and 1996, respectively.
OTHER BUSINESS
Management knows of no other matters to be presented at the annual
meeting. If any other matter properly comes before the meeting, the appointed
proxies will vote the proxies in accordance with their best judgment.
ANNUAL REPORT TO SHAREHOLDERS
A copy of Vectra's Annual Report to Shareholders for the fiscal year
ended December 31, 1996, accompanies this Notice of Annual Meeting and Proxy
Statement. No part of the such Annual Report is incorporated herein and no
part thereof is to be considered proxy soliciting material.
By Order of the
Board of Directors
Denver, Colorado
March 21, 1997
11
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This is a report of the Compensation Committee of the Board of
Directors (the "Committee"), which is composed of the following Board members,
Richard B. Tucker and Robert D. Greene, both of whom are nonemployee Directors.
This report shall not be deemed incorporated by reference into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not
otherwise be deemed filed under either such Act.
In designing executive compensation, the Committee has adopted the
policy that Vectra's executives should be paid fairly for the positions they
hold in view of the nature and size of the business which Vectra operates. The
compensation level of the executives of Vectra recognizes contributions by the
executives and is designed to attract and retain competent executives who share
the objectives of Vectra and its shareholders. The goal of the Committee is to
ensure that Vectra employs qualified, experienced executive officers whose
financial interest is aligned with that of the shareholders. The Committee
considers general industry practice, tax effects and other factors in
structuring executive compensation awards. Base salaries for each of the
executive officers of Vectra are determined by taking into consideration
performance, length of tenure with Vectra, compensation by industry for
comparable positions, and career achievements.
In addition to their base salaries, executive officers may be awarded
an annual bonus depending on performance relative to the business plan of
Vectra and the Committee's assessment of the executive officer's personal
contribution to such performance. Such performance may be measured by several
criteria that are considered important to the success of Vectra for its
shareholders. These criteria are not specifically weighted in the
determination of whether to award an annual bonus to an executive officer since
the relative importance of such criteria may change from year to year and the
relative responsibilities of each executive officer in the achievement of each
of the objectives may differ. Examples of criteria considered are: job
performance; effort expended on achieving Company goals, such as achievement of
balance sheet goals, growth in net interest and fee income, control of general
and administrative expenses, overall financial management, overall personnel
management and efforts expended in the growth of Vectra, whether through
acquisitions or through expansion of the customer base. The Committee has
concluded that Vectra's executive compensation was specifically tied to 1996's
corporate performance as well as to attainment goals and objectives specific to
each officer.
The Company believes that its executives should have a vested interest
in the Common Stock and, therefore, stock options are used as an integral part
of creating incentives for executives. Option grants are dependent upon
individual performance, level of responsibility and base salary and the number
of shares covered by all outstanding options in relation to the total number of
outstanding shares of Common Stock. Options are used in order to align the
benefits received by the executive officers with the amount of appreciation
realized by shareholders.
Since Vectra was founded, it has experienced significant growth in its
loans, deposits and income. The Committee believes that Mr. Judd's performance
as Chief Executive Officer continues to be important to Vectra's success. His
ongoing leadership is needed to achieve meaningful financial results. His
efforts encompass the strategic direction for Vectra's vision as well as direct
involvement in driving Vectra's balance sheet and income statement growth. The
Committee believes Mr. Judd's 1996 compensation was consistent with the overall
executive officer compensation structure.
All recommendations of the Committee have been and are subject to
review and approval of the Board of Directors.
VECTRA BANKING CORPORATION
COMPENSATION COMMITTEE
Richard B. Tucker, Chairman Robert D. Greene
<PAGE> 15
EXHIBIT A
ARTICLE 4
CAPITAL
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 30,000,000 of which 5,000,000
shares shall be Preferred Stock with a par value of $.10 per share and
25,000,000 shares shall be Common Stock, with a $.01 par value. The Common
Stock shall be entitled to one vote for each share thereof, and each fractional
share of Common Stock shall be entitled to a corresponding fractional vote on
each matter submitted to a vote of shareholders.
The Preferred Stock of the Corporation shall be issued in one or more
series as may be determined from time to time by the Board of Directors. In
establishing a series, the Board of Directors shall give to it a distinctive
designation so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series and the preferences,
rights and restrictions thereof. All shares of any one series shall be alike
in every particular. All series shall be alike except that there may be
variation as to the following: (1) the rate of distribution, (2) the price at
and the terms and conditions on which shares shall be redeemed, (3) the amount
payable upon shares for distributions of any kind, (4) sinking fund provisions
for the redemption of shares, (5) the terms and conditions on which shares may
be converted if the shares of any series are issued with the privilege of
conversion, and (6) voting rights except as limited by law.
A-1
<PAGE> 16
PROXY PROXY
VECTRA BANKING CORPORATION
1650 South Colorado Boulevard, Suite 320
Denver, Colorado 80209
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Vectra Banking Corporation acknowledges
receipt of the notice of Annual Meeting of Shareholders, to be held Wednesday,
April 23, 1997, at 9:00 a.m. local time at the Phipps' Mansion, 3400 Belcaro
Drive, Denver, Colorado, and hereby appoints Gary S. Judd and Ray L. Nash, each
with the power of substitution, as Attorneys and Proxies to vote all the shares
of the undersigned at the Annual Meeting and at all adjournments thereof,
hereby ratifying and confirming all that the Attorneys and Proxies may do or
cause to be done by virtue hereof. The above-named Attorneys and Proxies are
instructed to vote all of the undersigned's shares as follows:
<TABLE>
<S> <C> <C> <C>
1. Election of eight Directors.
[ ] FOR [ ] AGAINST
[ ] Gary S. Judd [ ] James L. Rumsey [ ] Robert D. Greene
[ ] W. James Tozer, Jr. [ ] Richard B. Tucker [ ] Robert A. Silverberg
[ ] Mary Gittings Cronin [ ] Gary A. Mosko
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CHECK
THE BOX NEXT TO NOMINEE'S NAME.)
2. Approval of the appointment of KPMG Peat Marwick LLP as
independent auditors for 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and vote upon a proposal to amend the Articles of
Incorporation to increase Vectra's authorized shares from
8,000,000 (1,000,000 shares of Preferred Stock and 7,000,000
shares of Common Stock) to 30,000,000 shares (5,000,000 shares
of Preferred Stock and 25,000,000 shares of Common Stock); and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Transaction of such other business as may properly come before
the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED ABOVE IN PROPOSALS 1 AND FOR PROPOSALS 2 AND 3.
Please sign your name exactly as it appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
DATED: , 1997
------------------ ---------------------------------
SIGNATURE
---------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. NOTE: SECURITIES
DEALERS PLEASE STATE THE NUMBER OF SHARES OTED BY THIS PROXY:
-----------------
